Mackenzie Bathgate and her husband, Jon, have been trying to buy a home in Lansdale, PA., for eight months now.
“At this point, we’ve seen 28 homes in person, but ultimately made seven different offers, each one a little bit more aggressive than the last just because we got so tired of it,” Bathgate said. “It’s supposed to be exciting and it’s been the opposite.”
Bathgate said they had waived inspections and bid tens of thousands of dollars above asking price, and still no luck.
Meanwhile, they’ve been watching interest rates spiral higher and higher — each increase adding to the pressure of finding their home.
“That’s when we started to feel all that stress of like, ‘Oh God, we need to make sure every weekend is focused on seeing these three specific houses that we’re interested in,’ because we know that they’re going to have an offer accepted by Monday.”
The couple is now exhausted and have decided to put their search on pause, just as the Federal Reserve raised interest rates again.
On Wednesday, the central bank hiked rates by three-quarters of a percent. It is the fourth time it’s done so this year — a pace that the U.S. has not seen since the late 1980s.
The average rate on a 30-year fixed mortgage is now around 5.5%, almost double what it was at the start of the year, according to Freddie Mac. Those higher rates, combined with already high home prices, mean it’s become a lot harder to buy a house, even if the competition might be slightly less stiff.
“Nationally and locally we’re seeing a cooling down, a decrease in demand, and an increase in supply,” said Ashley Jackson, a realtor with Realty Austin in Austin, TX. “We’re seeing that across the board, which you would expect with such a sharp increase in interest rates.”
Jackson said the white-hot market for property had allowed sellers and agents to become accustomed to properties getting snatched up within days, and being inundated with 20 or more offers for a listing, many over asking price.
“[Sellers] may feel a little frustration if their home is sitting on the market for 21 days, which is actually still quite good. So it’s just the narrative,” said Jackson, who is also the 2022 president-elect for the Austin Board of Realtors.
But the frustration has found no end for homebuyers, who have been fighting against a competitive market and continual interest hikes.
Sienna Connor currently rents an apartment in Iowa City with her husband, Rex, and their two babies. The Connors began considering buying a home in 2020, just before the pandemic, but the bank said they weren’t ready.
“We were told by a mortgage lender that our credit needed to be a little bit higher. It’s taken us a few years to save up for a down payment and closing costs and whatnot,” Sienna Connor said.
Finally, this month, they were pre-approved at an interest rate of 5%. But that rate does not lock until they have an offer accepted on a home. And with all the time that it took to save up and boost their credit, Connor said they may have missed their window.
“A few years ago, we probably would be able to afford a decent three bedroom home for our family. But once the interest rate goes up, we will effectively be priced out of this entire area,” she said.
Others have been able to find opportunities within the increases, like Peter Heuer and his wife, Cathy Yount. After a long search, they are finally in contract on a house in Rochester, New York.
“I think they [higher interest rates] actually helped us, personally, because they diminished the competition a lot,” Peter Heuer said. “So the last couple of offers that we submitted, including the final one, which was successful, we only had a couple offers on the property as opposed to 10 or 20.”
Heuer said he was happy with the stability and freedom that homeownership would provide him and his family. But for the Bathgates in Pennsylvania, the Connors in Iowa, and countless other Americans, those luxuries feel further out of reach than ever.
For Bathgate, it’s simple.
“We just want a home,” she said. “We just want to have a family and a yard and be able to have a beer on our deck at the end of the day. And it’s disheartening and I feel like the American dream isn’t attainable anymore.”